Low I R "propel" House Prices "up...and Up And Up" In London

[Realistbear]

http://www.thisislondon.co.uk/news/article...to=newsnow&

For house and rental prices, the only way is

up... and up, and up

11.06.07

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housesales

It seems in the UK property game, the only way to play your cards right is to guess higher, and higher again.

Despite interest rates soaring higher than ever

, with another raise expected, house price inflation picked up in April, pushing the price of an average UK home to £209,454.

IR policy that remain accommodative will fuel rather than dampen inflation.

Edited June 11, 2007 by Realistbear

[Guest Cletus VanDamme]

Seven out of 10 letting agents in central London reported that there are now more tenants than properties - the highest proportion seen since the survey started six years ago.

I said some time ago that I'd noticed, anecdotally, that rents are rising in London and here is more evidence of it.

It's really not turning out as hoped, is it. Prices and rents rising in tandem.

[Eriadus]

I said some time ago that I'd noticed, anecdotally, that rents are rising in London and here is more evidence of it.

It's really not turning out as hoped, is it. Prices and rents rising in tandem.

I've just started renting in London and from talking to the agents they were saying rents had gone up - the places I was looking at were supposedly 350 per week now vs 300 9-12months ago. I still managed to get my rent down towards the 300 so clearly it is just agents talking up the market. When questioning one agent why rents were going up as it made no economic sense he just said it's demand you know, simple economics. At this point I was tempted to inform him of my recently completed masters in said subject but instead just pressed him what kind of demand and from where - EE immigrants, gypsies, an influx of american bankers or what? He had no answer and just said rents go up and that it's a natural process. Needless to say I didn't trust him one bit and went with another agent who was a bit more honest.

[Leonard Hatred]

Despite interest rates soaring higher than ever

Was this written by a 15-year-old, then?

[Drunken Tiger]

I said some time ago that I'd noticed, anecdotally, that rents are rising in London and here is more evidence of it.

It's really not turning out as hoped, is it. Prices and rents rising in tandem.

I think they HAVE risen.....a bit (at least in the area I watched). But the question is...WHY?

Is it because of lack of supply, or is it a spin-off from media hype regarding HPI in London? I.e. "Shock! Horror! House prices are through the roof, can't afford them, so more people renting, so better not haggle about the rent, then!"

As a bear I suspect the latter. Many people, especially the under 30's are so easily spooked by the media..but I think it's a sign that the endgame is approaching...

[me me me]

I managed 10% off rental asking price in London for next 12 months.

[Rizo]

I think they HAVE risen.....a bit (at least in the area I watched). But the question is...WHY?

Is it because of lack of supply, or is it a spin-off from media hype regarding HPI in London? I.e. "Shock! Horror! House prices are through the roof, can't afford them, so more people renting, so better not haggle about the rent, then!"

As a bear I suspect the latter. Many people, especially the under 30's are so easily spooked by the media..but I think it's a sign that the endgame is approaching...

How can rents and prices going up be a sign of the end game? You must actually be drunk!!

No one wants a crash more than me and this is obviously bad news

[wanttomoveon]

I think it's partly an accepted inflation factor on the part of the tenants, but mostly due to the landlords trying to maintain their yields now they know that interest rates are going against them. Doesn't mean they'll actually get those higher rents in the medium term - just like they won't necessarily get their asking prices if they try to sell.

[Drunken Tiger]

How can rents and prices going up be a sign of the end game? You must actually be drunk!!

I have been known to post when a bit tipsy but I'll have you know I'm stone cold sober right now.

I think it's endgame as what we are witnessing is one last attempt by V.I.s to play the scariest card, i.e. "prices always go up, so if interest rates go up then rents rise automatically". Nice try, but we're not going to fall for that, are we?

There are clear limits as to how much, and how fast, rents can rise, IMO..

[Drunken Tiger]

I managed 10% off rental asking price in London for next 12 months.

I wish eveyone went in with your attitude and made 'em sweat for your hard-earned cash! To (too) many in London it's just "funny money"...and that pushes prices up for the rest of us.

[Guest Cletus VanDamme]

I've just started renting in London and from talking to the agents they were saying rents had gone up - the places I was looking at were supposedly 350 per week now vs 300 9-12months ago. I still managed to get my rent down towards the 300 so clearly it is just agents talking up the market.

Well, not quite, as clearly you are paying more rent now than if you had started the rental contract 9-12 months ago. You say 'towards the 300 mark', so I'm guessing around 325 per week. Whereas 9-12 months ago a place advertised at 300 pw you could probably have haggled down to 275.

[Agentimmo]

I wish eveyone went in with your attitude and made 'em sweat for your hard-earned cash! To (too) many in London it's just "funny money"...and that pushes prices up for the rest of us.

Exactly. Once a good dose of unemployment hits London/The City, then we'll quickly see the endgame.

The BTL landlords who run their own properties tend to be open to negotiation, imo. The agencies are not pro's for nothing and will talk the hind legs of a donkey to convince you that you should sign before the price moves up.

Will be great to see all those idiots from Foxtons, Remax etc get the boot pronto once the commissions start to dip....

Can't wait

[Realistbear]

I said some time ago that I'd noticed, anecdotally, that rents are rising in London and here is more evidence of it.

It's really not turning out as hoped, is it. Prices and rents rising in tandem.

Just a little way outside London in BUCKS rents are plummeting. I have been looking for several weeks for my daughter and found a place that was on for 1k, reduced to 900 and finally signed for 850. Lowest rent for years for that particular property. Too much available, too many low paid people is a recipe for disaster for BTLers. The economy is slowing and jobs will get tight and rents will have to reflect the new reality.

IMO, BTL is possibly the worst investment to be in right now.

[Jimmy2Times]

IMO, BTL is possibly the worst investment to be in right now.

BTL = Bought Too Late.

[Ash4781]

The latest Association of Residential Letting Agents (Arla) survey found that on balance there was an increase in tenant demand and achievable rent levels in May. More than two-thirds of prime central London agents reported rising rents, compared with around half of those in the rest of the South East and around a third of those outside the region.

Does that mean rents are static on average in the South East ? (excluding London)

Despite the rising level of rent, the average yield for landlords was down slightly, from 5 per cent in February to 4.8 per cent in May for houses, and 5.1 per cent to 5 per cent for flats.

No wonder they are talking up rents!

Edited June 11, 2007 by Ash4781

[ParticleMan]

It's really not turning out as hoped, is it. Prices and rents rising in tandem.

My ex-landlord obviously believes the kind of nonsense you spout - he thought he'd try for 2.8% at renewal (the first crack in 6y).

So he got told where to stick it and the new place is 16% cheaper.

Cancelling the season ticket (walking distance to work) was an added bonus.

Hey-ho.

[Northern Monkey]

I have to be honest and say that my girlfriend and I have been scouring for a decent flat in North East London (mainly Wanstead, Snaresbrook and South Woodford) and we cannot seem to get anything to rent.

Flats are going the minute they hit the market, if not before, and always for at least the full monthly asking price - which we understand is a substantial premium to previous years.

We are even missing out on flats to people putting down deposits blind - we had a viewing recently whereby before we could get back to the office with the EA ourselves, someone had seen the ad on the web and placed a deposit without even seeing the place of the full asking price!

I gather the STR brigade are actually fuelling the rental markets in these area's and marginalising even further young proffessionals seeking 1 and 2 bed flats.

[IDN]

I've just started renting in London and from talking to the agents they were saying rents had gone up - the places I was looking at were supposedly 350 per week now vs 300 9-12months ago. I still managed to get my rent down towards the 300 so clearly it is just agents talking up the market. When questioning one agent why rents were going up as it made no economic sense he just said it's demand you know, simple economics. At this point I was tempted to inform him of my recently completed masters in said subject but instead just pressed him what kind of demand and from where - EE immigrants, gypsies, an influx of american bankers or what? He had no answer and just said rents go up and that it's a natural process. Needless to say I didn't trust him one bit and went with another agent who was a bit more honest.

300 pw- please tell me thats what you are paying for a nice house in a nice area

[HPC Convert]

I think it's endgame as what we are witnessing is one last attempt by V.I.s to play the scariest card, i.e. "prices always go up, so if interest rates go up then rents rise automatically". Nice try, but we're not going to fall for that, are we?

Ah yes, the end game approaches........Or another way of looking at is that despite fireballs in the sky and all the other twaddle, prices are not dropping and there is some evidence that rents are rising as well. Sure you are right though, just more evidence that we are hurtling towards a crash, just a matter of time, put the seatbelt on, mother of all crashes etc etc etc.

[stormymonday_2011]

The sell off in the bond market indicates that the expectation amongst the financial community is that interest rates are likely to be going higher. The value of sterling has already turned south and the BOE know that if they sit on their hands for too long then they could end up with a full scale monetary crisis on their hands. This means UK IR rates are certain to go up. People may think they can buck the impact of dearer borrowing by fixing their mortgage rates etc but sooner or later the higher cost of credit will filter back into the economy. All those city worker hoping to earn huge bonuses from M&A activity ought to be watching their backs for some of them might find that all Santa is bringing this Christmas is a P45 and a black plastic sack.

[Wad]

Exactly. Once a good dose of unemployment hits London/The City, then we'll quickly see the endgame.

The BTL landlords who run their own properties tend to be open to negotiation, imo. The agencies are not pro's for nothing and will talk the hind legs of a donkey to convince you that you should sign before the price moves up.

Will be great to see all those idiots from Foxtons, Remax etc get the boot pronto once the commissions start to dip....

Can't wait

When the stockmarket / bond market goes pop you can forget City bonuses, rising prices or rising rents. I was there in 1987 and it was carnage by 1992. Our rent never went up for five years. Rental yields came back to a sensible level only because prices fell and there was a bit of normal RPI type inflation in rents by 1997.